Aweys' comments came hours after he called the fighting around the government's encircled stronghold, Baidoa, "a small incident".
'Fighting set to continue'
Both sides claimed to have killed hundreds. But there was no independent confirmation of casualties.
The fighting started late on Tuesday, the deadline the Somalia Islamic Courts Council (SICC) had given Ethiopian troops protecting the government to leave the country or face war.
"The fighting looks like it will continue," Ali Ahmed Jama, Somalia’s information minister said.
"There are a lot of casualties, especially on the side of the Islamic Courts because they were on the offensive while our troops were in defensive positions."
Residents and a Somali government source said troops loyal to both sides also appeared to be moving north in what some feared could spell fresh fighting in the town of Galkaayo.
Thursday's shelling seemed to scuttle the shuttle diplomacy by Louis Michel, a European Union aid, on a mission to push the two sides back to the bargaining table.
|"These are baseless allegations which Aweys has been saying all along to mislead international public opinion,"|
Zemedhun Tekele, Ethiopian spokesperson
Aweys, who denies US and UN allegations he is linked to al-Qaeda, blamed Ethiopia for starting the fight: "If we are attacked we are not going to sit back."
Ethiopia remained officially silent on a declaration of war and again denied its combat troops were in Somalia, but has promised "to inform the world" if it decides to attack the SICC.
"These are baseless allegations which Aweys has been saying all along to mislead international public opinion," Zemedhun Tekele, the Ethiopian information ministry spokesperson, said.
Diplomats said it may take days or weeks to decide whether the fighting is actually a war, given the traditionally irregular nature of Somali combat.
One western diplomat described it as skirmishing that could be war "if it keeps coming".
Another said: "It's hard to say. If it stops in a couple of days, I am not going to call it a war."
Large of number of troops
Military experts say Ethiopia has sent 15,000-20,000 troops into Somalia, while Eritrea has sent about 2,000 to the SICC.
Asmara denies any involvement and Addis Ababa says it has only a few hundred military trainers in Somalia but has vowed to crush any attack against them.
Witnesses in Baidoa said an Ethiopian military helicopter had flown out of the city on Thursday, and an unmarked C-130 airplane believed to be flying surveillance runs circled the dusty trading post that is the government's only safe ground.
Residents in Mogadishu, seized by the SICC in June, said checks at all major intersections has intensified, with several "technicals" - heavily armed trucks - patrolling the streets in a sign of growing tension.
Source: Al Jazeera and agencies